The mistake: buying health insurance only when you are already unwell or planning a procedure. By that point, the relevant waiting period may mean the claim is excluded. Buy health insurance when you are young and healthy — waiting periods expire over time, not when you are already sick.
Mistake 3: Not Reading the Room Rent Sub-limit Clause
Many lower-premium health policies include a room rent sub-limit — a cap on the room rent they will reimburse (e.g., 1% of sum insured per day, or a fixed ₹3,000/day). When you choose a room that exceeds this sub-limit, the insurer pro-rates all other medical expenses accordingly — not just the room charge. This can result in 30%–50% of your total claim being disallowed even though you are within your sum insured.
Example: Policy has 1% room rent sub-limit on ₹5 lakh = ₹5,000/day limit. You choose a ₹10,000/day room (ratio 2:1 above limit). Total bill ₹4 lakh including ₹30,000 room rent (3 days). Insurer may pro-rate all associated charges at 50%, settling only ₹2 lakh instead of ₹4 lakh. Always choose a policy with no room rent sub-limit or a very high one.
Mistake 4: Relying Only on Employer Group Insurance
Employer-provided group health insurance is a valuable benefit, but relying on it exclusively is financially dangerous:
- Coverage ends immediately if you resign, are made redundant, or retire
- Group policy sum insured (often ₹3–5 lakh) is typically insufficient for serious illness
- Pre-existing diseases are covered under group insurance (no PED waiting period), but when you transition to an individual policy after leaving employment, a new PED waiting period applies — and if you are older, the premium will be higher
Always maintain a personal health insurance policy alongside your employer group cover. The personal policy keeps PED waiting periods running independently and ensures portability across employers and into retirement.
Mistake 5: Skipping Pre-existing Disease Disclosure
Failing to disclose a pre-existing condition (diabetes, hypertension, thyroid disorder, asthma) during the proposal process is the single most common reason for health insurance claim rejection in India. Insurers investigate claims and their medical underwriters are trained to identify undisclosed conditions. If a claim arises from a condition you did not disclose, the insurer will reject the claim and may void the policy entirely — leaving you with no coverage and no refund of premiums paid.
Disclose every pre-existing condition honestly. The insurer may load your premium or exclude specific conditions — but this is far preferable to a total claim rejection when you need the coverage most.
Mistake 6: Choosing a Policy with a High Co-pay
A co-pay clause requires you to bear a percentage of every claim (e.g., 20% co-pay means you pay ₹20,000 on a ₹1 lakh claim). Co-pay lowers the premium, which makes it attractive at purchase — but significantly increases your out-of-pocket expense at claim time, precisely when you can least afford it.
For a family of four, a 20% co-pay on a ₹6 lakh hospitalisation means ₹1.2 lakh out of pocket above the deductible. Avoid co-pay policies unless the premium saving is very substantial and you have a strong emergency fund to cover co-pay amounts.
Mistake 7: Not Reviewing the Network Hospital List
Most health insurance policies offer cashless hospitalisation only at hospitals on their network list. If you are admitted to a non-network hospital — even in a genuine emergency — you may need to pay upfront and claim reimbursement later, which is slower and sometimes results in partial settlement. In Hyderabad specifically, verify that major hospitals like KIMS, Yashoda, Care, and AIG are on your insurer's network before purchasing. In smaller cities or towns, network hospitals may be limited — assess this before choosing an insurer.
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About Finvastra
Finvastra is a financial advisory firm based in Hyderabad, Telangana. Finvastra is an independent insurance advisory.
Disclaimer: Insurance is the subject matter of solicitation. Please read the policy document carefully before purchase. This article is for educational purposes only.